Tenant bluff fails...but Court of Appeal turns it around

Update
The original decision has now been overturned (please see bottom of page).

Overturned decision
Recently, the tenant (under its new name, Thales Tracs Ltd) appealed. The appeal was successful and the original decision reversed.

The Court of Appeal decided that the tenant was entitled to compensation, even though it did not intend to stay at the premises when the Secion 26 Notice was served. In its view, Section 26 does not demand that the tenant has any particular ’state of mind’ - his intention is irrelevant.

The Court of Appeal’s decision now makes the position clear as to when a tenant is entitled to receive compensation when a request for a new tenancy is opposed for re-development grounds.

Original Decision
In the case of Sun Life Assurance Plc v. Racal Tracs Limited, the tenant served a notice under Section 26 of the Landlord and Tenant Act 1954 requesting a new tenancy. In fact, at the time of service of the notice, the tenant had already acquired alternative premises and had no intention of renewing its lease. The only reason for service of the notice was that the tenant was aware that the landlord intended to redevelop the site and would be forced to object to a renewal on redevelopment grounds, thereby entitling the tenant to compensation for disturbance.

The Section 26 notice was held to be invalid because the tenant had effectively misrepresented its intention to renew. It is thought that this is a relatively unusual situation and that the usual method of service of a precautionary notice would not invalidate the notice.